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Design Your Company, Not Your Product

These entrepreneurs are shaking up the idea of what it means to build a company. Is nurturing company culture more important than getting a product to market?

By Tim Donnelly

Squarespace is just one start-up that is focusing on company culture.

When you think of creating a company, all the focus is usually on what you want to make: how the app will work on someone's phone or how attractive your product will look like on store shelves.

There's a new wave of entrepreneurs who believe the real key to long-term success comes from focusing on designing the company--not the product.

That means establishing a solid company philosophy, fostering cooperation and friendliness among the staff while still being able to make the key decisions--all steps that help save your office from feeling like just another widget factory.

The topic was featured at the first Northside Entrepreneurship Festival in Brooklyn recently on a panel that included Anthony Casalena, CEO of Squarespace, Chris Shiflett, co-founder of the Web conference Brooklyn Beta, and Whitney Hess, the principal consultant at user-experience consultancy Vicarious Partners. They're not the only ones who see building a company as important as building the thing you're going to sell. Here are their best pieces of advice for creating a strong company.

1. Have a crystal-clear mission statement.

Making a mission statement doesn't mean you have to lay out your whole life philosophy and plans for future growth. Casalena said watching videos of Mark Zuckerberg talking about Facebook in college was particularly illuminating.

"He doesn't come out with this 'make the world more-connected place' stuff," he said. "I think if you attack a problem that's really, really, deep you will have the ability to discover these deeper missions in it."

Hess said to remember that all businesses exist to solve a problem.

"A lot of companies people work with have a solution in mind, but don't know what problem they're solving," she said. "If you don't know what the problem is you're trying to solve, why are you in business in the first place?"

Hess said when she counsels companies on this--from four person operations to 30,000 ones--she ends up playing a role that is kind of like that of a group-therapist, helping the employees communicate with each other.

"It can be very easy to stop talking to the other people you run the business with in a meaningful way," she said. "Take a step back and say 'this is why we're here.' Make sure every decision that's made is here to support that."

2. Be flexible, and ditch the rules.

A good guiding principle means you won't have to set as many strict rules either, said Arshad Chowdhury, CEO of employee performance review company Clear Gears. Chowdhury is also the founder of MetroNaps, which rents spaces for busy workers to catch a few mid-shift winks. He says fewer rules allows employees to set their own hours, and regulate their own energy. That of course includes the ability to take naps in the middle of the day.

"A lot of the rules that we have are made to govern the 2% of the population who might break those rules," he says. "That usually applies to everything from dress code to hours worked. Having fewer rules is better."

"Initial business plans and financial projections are almost always works of fiction," she said. "Make sure you're flexible and creative enough to come up with plans B, C, and D."

She cited Nobel prize winner Muhammad Yunus, who tried lending primarily to men at Grameen Bank for several years unsuccessfully until he finally grew flexible after seven years and found the winning formula: lending primarily to women.

3. Build the right team.

The privilege of having a small company is that you get to give each new hire the full exposure to the whole operation, even before they official come on board. You'll lose that ability once the company grows, but it can build the foundation for a strong core, Casalena said.

When doing the hiring, he said it's important to have someone interviewing candidates who gives a fair picture of the demeanor of the company, so the candidate doesn't get the wrong idea.

"It seems to me to be very important that the person doing the interviewing represents the values of the company in a way you feel is valid," he said.

Hess said the upside of hiring for a small company is that you can focus on the chemistry of all the employees.

"At a small enough size, 10-12 people ... you can still have that candidate meet everyone on the team," she said.

Otherwise, you risk shaking up a functional dynamic.

"When you spring a new person on a group that's that small, that has developed a friendship and that's been in the friendship together, that can create alienation on the team," he said. "That can kind of be the beginning of the end. People can learn and people can grow but it's a lot harder to change a personality."

Casalena says he never hires the "maybe" candidates.

"I like putting people in front of the product and seeing if they get excited about it," he said. "If they get excited about it, we probably speak the same language."

4. Ask: Do you really need titles?

Panelists at Northside admitted the idea of ditching titles all together sounds a bit new-agey in the business world, but they said it's sometimes just the shakeup a company needs to feel innovative.

Too many companies get caught up in giving employees' fancy titles, without recognizing that some people can feel pigeon-holed into certain roles by arbitrary titles, Shiflett said. This happens to him even at Brooklyn Beta.

"Sometimes I'm feeling confined by 'Web developer,' " he said. He joked that the term "Web craftsman" feels more fitting.

"What is the problem that titles solve?" he asked. "Maybe there is some other way to get around that."

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Even if you ditch the titles, it's still important to clarify roles within the company. Nelson said that while it's important to have a collaborative work environment that welcomes input from everyone, having clear roles and responsibilities is necessary.

"Every staff member has to be clear on which decisions are collaborative, and which decisions will be made by senior management," she says. "It's also helpful to folks outside the company to know who's in charge of what."

Hess says the problem with concrete titles is that for start-ups, roles are constantly shifting.

"I think focusing on the title itself is not really all that helpful," she said.

Casalena was even more bullish on the issue; he considers it "one of the biggest mistakes your company came make," especially for C-level titles. The problem for him is that it blocks your ability to switch employees' roles in the company without publicly humiliating them. For start-ups, he advises to wait as long as possible before creating formal executive positions.

"I'm a strange proponent of benevolent dictatorship," he says. "You just need to make decisions and move on. The dialogue needs to not go on forever."

That stage will occur if your business is growing, Hess said, and that's when you need to look for the right mangers.

"The people who are hired early on are great workers. That's why the company's growing in the first place," she said. "That doesn't mean they're great managers. Sometimes the best doers are the worst managers."